One of the toughest things for traders to do is realize losses. I have written about it here already. You also find that this holds in terms of what market participants are willing to fess up to in public. We see this with traders (and gamblers coming back from Vegas) all the time and the current main stream media supports this to no end. Guys pop up on the CNBC and on the major financial websites and remind us of their winners chapter and verse while neglecting to emphasize losers or by rationalizing previous losing positions with some dog ate my homework cha cha…
People are tied to inauthentic impression management with motivations from internal (preserving a positive but fragile ego) to external (preventing investors from fleeing a money management firm).
But it does not add value!
The temptation to act this way especially in the virtual world is high and has a history. It is easy to disappear for a while if you’ve made a losing call in public. You can just duck out until others forget and then log back in as if nothing had ever happened or in the case of the old Yahoo finance message boards can simply set up a new alias and continue with a fresh portfolio.
At StockTwits though, we are in the midst of something very different happening and its awesome.
The traders who are emerging as leaders have set a distinctly different tone one in which they hold themselves accountable for their trades in real time including losing trades. This is hugely valuable because the traders themselves are realizing and managing while others within the community are relating to the experience and learning. Win Win!
Besides, experienced traders know that losing trades happen frequently and that it is less their occurance and more the way they are handled with discipline that seperates the consistent winners from the losers.
You can find it here and here and here and the list goes on and on. It is my strong hunch that those who have set the precedent of transparency and accountability on StockTwits are also the ones who manage their losses prudently.
Thanks people who model this brutal honesty. We want to promote this on StockTwits to no end.
It adds big value.